Adidas AG already dominates the global soccer market. It is now targeting teenage girls more influenced by music and fashion than sports.
By expanding its NEO fashion outlets, which offer such looks as metallic leather boots, and by exploiting social-media platforms including Facebook and Twitter, the world’s second-largest sporting-goods maker hopes to attract 14 to 19 year-old girls. The company estimates the effort may bring in an additional $1.3 billion in revenue by 2015.
“Teenage girls are a target group we didn’t really reach so far, whereas boys are closer connected to Adidas via sports,” said Erich Stamminger, the board member responsible for global brands. “For girls, you need a bit more of fashion influence and that’s exactly what we are offering with NEO.”
The three-year-old NEO fashion chain has made inroads in Russia, India and especially China, where it has 1,000 stores. With the opening in Hamburg this month of the first of 10 stores planned in Germany, Adidas is pushing into the more crowded and more competitive fashion market in western Europe, where Inditex SA and Hennes & Mauritz AB are already firmly established.
NEO, with 26 outlets in Russia, 60 in India and products for sale in such US department stores as Kohl’s Corp, JC Penney Co and Brown Shoe Co’s Famous Footwear chain, generated sales of about euro 400 million in 2010 and euro 500 million last year, according to estimates by Mark Josefson, an analyst at Silvia Quandt Research. Adidas has forecast group revenue of euro 17 billion by 2015, with growth being driven by expansion in China and Russia.
Cracking the teenage fashion market won’t be simple. Hennes & Mauritz, the world’s second-largest clothing retailer behind Inditex, reported a fifth consecutive drop in quarterly profit on January 26 as it stepped up discounting amid a lull in consumer spending. H&M plans to open 275 stores this year, while Inditex is adding Zara outlets and expanding its e-commerce range.
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“Adidas has the experience from the retail side, but the brand has to differentiate itself because it’s a very competitive environment,” said Thomas Effler, an analyst at WestLB AG in Frankfurt. “Social media can be a way for Adidas to differentiate itself.”
To interact with teenagers, NEO is developing social-media channels on platforms such as Facebook and Twitter. A mirror inside the Hamburg store allows customers to take photos of themselves in outfits and to post them online. The brand is putting Twitter feeds into stores allowing managers to share information, said Claire Midwood, who heads the NEO label.
Liked on Facebook
“Our consumers’ lifestyle is in digital media, that’s why we need to be there as well,” Midwood said. “Not only will we develop digital applications and experiences for our consumer to use out of store, but we will also introduce new digital innovations at retail.”
About 12 million Facebook users said they liked the page created for Adidas Originals, part of the Adidas Sport Style unit that includes NEO, which accounts for over 20 per cent of group sales. That’s more than for any other company in Germany’s benchmark DAX Index and also more than the six million Facebook users who said they liked the Nike Inc page.
“It’s all about creating hype and buzz around the brand,” said Matt Powell, an analyst for Charlotte, North Carolina-based SportsOneSource “Social media is very important for this generation, even more so than broadcast media. Social media is the primary source of communications for teenagers and it’s exactly the appropriate approach for today’s consumer.”